Has Digital Village Construction Narrowed the Urban-Rural Income Gap: Evidence from Chinese Counties

Can the backward endowments of rural areas support digital village construction to attain the expected results? If the answer is yes, what are the mechanisms involved? Answering these questions is related to common prosperity. Counties are China's frontline commanders, and the urban-rural income gap is a suitable entry point for observing the urban-rural digital divide; however, there is limited research assessing the effectiveness of digital village construction from the perspective of the urban-rural income gap at the county level. In addition, counties lifted out of poverty, as counties with worse initial endowments and as counties that should be most concerned with common wealth, are more typical for examining the effectiveness of digital rural construction; however, there are few studies on counties lifted out of poverty. Based on cross-sectional data from 865 counties in China in 2020, this study empirically analyzes the impact of digital village construction on the urban-rural income gap using an OLS model. This study also conducts mechanism tests and poverty benefit tests in addition to heterogeneity and robustness tests. The findings indicate that the development of digital villages lowers the income difference between urban and rural areas, and that the shift in the industrial structure is a key driver of this effect. Different construction dimensions have varying degrees of impact, with digital infrastructure and the digitalization of the economy having the most significant impact, the digitalization of countryside governance coming second, and the digitalization of countryside life having the most negligible impact. The impact is more pronounced in the central-eastern region of China and counties that have just been lifted out of poverty than in the western region and counties that have never been in poverty. The government will benefit greatly from this study's understanding of the main themes, areas, and scope of digital rural construction, which will help to expand and further integrate the outcomes of reducing poverty and fostering shared prosperity.